Office of the Attorney General News Release Archive


Tuesday, June 26, 2001

TEXAS, 25 STATES REACH SETTLEMENT WITH SWEEPSTAKES GIANT

Publishers Clearing House to Pay $34 Million Nationwide

AUSTIN - Texas Attorney General John Cornyn announced today that sweepstakes giant Publishers Clearing House (PCH) will pay $34 million - including immediate restitution to thousands of consumers - and will make significant and permanent reforms in the way it conducts its future contests.

The groundbreaking agreement was reached with Texas and 25 other states. It must still be approved by each state's court and entered as a permanent injunction in each state.

The settlement and permanent injunction will resolve several state lawsuits, including one filed by the Texas Attorney General in October 1999, alleging consumers often were misled by PCH mailings into believing they had won contests or that making purchases would enhance their chances of winning. The states involved in today's settlement had rejected an earlier multi-state settlement reached last summer.

"At last, Texas consumers can rest assured that this settlement will hold PCH accountable in the way the company does business," said Cornyn. "This settlement, combined with new legislation approved this session will ensure that these kinds of deceptive practices will be a thing of the past. We will have in place, for the first time ever, several new safeguards in the law and many concessions from PCH."

The legislation, House Bill 2530, sponsored by Rep. Robert Junell (D-San Angelo) and Sen. Rodney Ellis (D-Houston), considerably strengthened the scope of civil penalties available to the Attorney General when bringing lawsuits against sweepstakes companies for wrongdoing.

Cornyn said today's settlement includes these concessions from PCH:

  • A provision that prohibits PCH from making any false statement, no matter how small or seemingly insignificant. In addition, the settlement puts in place strict prohibitions against misleading or deceptive statements or omissions and, for the first time, prohibits PCH from implying, by any means whatsoever, anything that it is prohibited from stating directly.
  • Prohibiting PCH from discriminating between consumers who order magazine subscriptions and those who do not. From now on, PCH may only use a single entry form for the sweepstakes, to be used by all consumers whether they order products from PCH or not. In the past, customers who did not buy magazines or other products were forced to search for a small, plain entry card among the various colorful mail pieces PCH included with the contest solicitation. This practice, now ended, led consumers inevitably to conclude that those who ordered had a better chance to win than those who did not.
  • An acknowledgment, for the first time, from PCH of the harm done in the past by its deceptive practices, and an apology for that harm.
  • Increased safeguards to protect that small minority of vulnerable PCH customers who may continue to be confused about whether buying products has any impact on their chances of winning.

In addition to the changes in their future business practices, PCH will promptly pay restitution totaling $19 million for customers who were deceived by past practices. PCH also will pay, for the first time, civil penalties totaling $1 million, as well as $14 million to cover the costs associated with the states' litigation and the costs of administering the restitution payments. These payments will be made promptly, instead of over two or three years, because the investigation shows that most injured customers are elderly and time is a factor.

In addition to Texas, the agreement with PCH has been approved by the Attorneys General of Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, North Carolina, Oregon, Pennsylvania, Rhode Island, Tennessee, Vermont, West Virginia and Wisconsin.

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